I love getting a raise. Especially one I didn’t ask for and didn’t do any work to get.
Even though the stock market has been increasingly worried about a recession over the past few months, right now is actually one of the best times ever for people to get a job or a raise.
Unemployment is at the lowest rate recorded since 1969.
Millions of Americans have been getting large raises over the past year. According to the Federal Reserve Bank of Atlanta, wages have increased by 6.3% over the last year. That’s the fastest pace in the past 25 years.
There’s just one problem: wage growth hasn’t kept up with inflation. Even though people are earning more money, prices have gone up so much that they’re actually slightly worse off than before.
But, there is one group of people who got raises that did beat inflation. And they didn’t even have to work for it. I’m talking about dividend growth investors.
Here at the Intelligent Income Daily, my team and I are focused on finding the safest income investments that can compound your wealth and provide you with a stream of steadily growing income.
We track more than 700 companies with growing dividends and last year they rewarded shareholders with a median dividend increase of 8%, easily beating inflation.
Today I want to tell you about three companies that recently rewarded their shareholders with dividend increases. I’ll show you why they are wide-moat businesses and why you can count on their dividends to keep growing, even when faced with a recessionary environment.
Always Be Essential
First up is CSX Corporation (CSX). If you live in the eastern United States, chances are there’s a CSX rail line running through your city.
CSX traces its roots back to the Baltimore & Ohio Railroad, which was founded in 1827. (Fun fact: this is the same B&O Railroad featured in the Monopoly board game.) Today, CSX is one of just seven Class I railroads, which move the majority of the freight in North America.
Rail networks are some of the most critical transportation infrastructure supporting our economy as they are one of the most cost-effective ways to move large quantities of goods over long distances.
CSX has grown its dividend for 19 years and just increased it by 10%. Its payout ratio is at a very safe level of 24%, which is sustainable even if the company’s earnings drop in a recession.
As a longstanding railroad veteran with an essential purpose, it has the tenets of being a wide moat investment. It does not have any strong competitors that are currently in danger of cutting into its revenue stream.
Next up is Nextera Energy (NEE). Nextera is the owner of Florida Power & Light, the main electric utility for the fastest-growing state in the nation.
Florida’s increasing population has led to increased demand for energy infrastructure, and it shows no sign of stopping anytime soon.
Nextera also happens to be one of the largest developers of utility scale renewable power plants, not just in Florida but all over the nation. The Inflation Reduction Act passed last year will bring more funding and tax benefits for clean energy projects.
Nextera has a 29-year dividend growth streak and just increased it by 10%. Its payout ratio is at 60%, which is one of the lowest among electric utilities. And since utility earnings tend to be steady even in tough times, Nextera will have a reliable income to keep paying its dividend.
Last but not least is Waste Management (WM). If you regularly see yellow and green garbage trucks roaming your neighborhood, there’s a good chance you’re a customer of Waste Management.
Waste Management dates back to 1893, when a Dutch immigrant started a business collecting trash in Chicago. Today, the company handles 25% of the waste collection market with 260 active landfills and more than 15,000 collection routes.
It also operates nearly 100 recycling centers and is even involved in energy production, with about 150 landfill gas-to-energy facilities.
Waste Management has grown its dividend for 20 years and just increased it by 7.7%. Its payout ratio is at 47%, which is safe. Trash collection is a utility-like service that is always needed.
Best of the Best at the Best Price
These are just three examples of strong, resilient blue-chip companies that can help you form an investment portfolio that will keep rewarding you with raises year after year.
I’m not recommending that you buy them right now, because aside from picking good companies, it’s also important to pay the right price. But these are three free picks that I do recommend buying as soon as they are trading at a discount.
If you are interested in finding out what I think are the best dividend opportunities in this market today, check out the Intelligent Income Investor premium service. We provide model portfolios (including one dedicated to REITS), trade alerts, and special reports on the highest quality dividend-paying companies the market has to offer. Our focus is on finding safe and secure dividends to create a growing income stream that will passively support your lifestyle with stress-free investments. To find out more, click here.
Happy SWAN (sleep well at night) investing,
Editor, Intelligent Income Daily